SpaceX Hits Phone Stocks, Oil Lifts Exxon and SLB, Amex Slips, Cyber Stocks Jump

Good evening. This is Trade and Ticker. Friday, October twenty-third, twenty twenty-six. Your evening company deep dive after the close.

Thursday was all about the A-I selloff. Friday was about oil, phones, and a few companies that told a very different story from the rest of the market. We've got four stories tonight. First, SpaceX and the phone companies. A report that SpaceX is lining up tens of thousands of cell sites for its own wireless network sent A-T-and-T and T-Mobile down almost eight percent each, and sent the cell tower owners sharply higher. Second, oil and the energy stocks. Brent crude closed at its highest level since late April, the energy sector finished at a record high, and Exxon, Chevron, and S-L-B all rallied. Third, American Express. It beat on profit, raised its outlook, and announced it's cutting about five percent of its workforce. The stock still fell almost four percent and was one of the biggest weights on the Dow. And fourth, the cybersecurity stocks. Palo Alto Networks and CrowdStrike jumped seven and eight percent as a scare over flaws in some of the web's most common code collided with a survey showing companies are still spending on security. Let's get into it.

First, a quick look at the board. It was a down day for most of the market, but not another tech wreck. The Dow fell about one and a quarter percent, or about six hundred fifty points. The S-and-P five hundred fell about half a percent. And the Nasdaq slipped about two-tenths of a percent, after spending part of the day higher. The Russell two thousand, the small company index, fell about three-tenths of a percent. So this time the Dow took the biggest hit, and the Nasdaq held up best.

The sectors tell the story. Energy was the clear winner, up about two and a half percent, and that group finished at a record high. Technology managed a small gain, up about a third of a percent. Almost everything else was lower. Consumer staples, consumer discretionary, and financials each fell well over one percent. Communication services fell too, dragged down by the phone companies. On the New York Stock Exchange, falling stocks outnumbered rising ones by about seven to four. And trading was lighter than average for the past month, so this looked more like investors stepping back ahead of a huge week than a rush for the exits.

The chip stocks steadied after Thursday's beating. The Philadelphia chip index rose about four-tenths of a percent. Micron gained about two and a half percent, and A-M-D and Intel each rose almost two. Nvidia slipped about six-tenths of a percent. Meta fell about one percent, adding a little to Thursday's seven percent drop. That's a pause, not a rebound. Nobody rushed back in.

For the week, the S-and-P five hundred fell about half a percent, its second straight weekly loss. The Nasdaq fell about seven-tenths of a percent. But the Dow actually finished the week up about four-tenths of a percent, its third straight weekly gain, even after today's drop.

Two things in the background matter for everything else tonight. Oil, which we'll get to in a minute, and rates. The ten-year Treasury yield rose back to just about five percent, after slipping below that level on Thursday for the first time since late September. And the University of Michigan said consumer sentiment slipped this month and is sitting near a record low, as higher prices tied to the Middle East conflict wear on households. That's the backdrop. Oil keeps climbing, consumers are gloomy, and the Federal Reserve meets next week.

Now, the four stories.

Deep dive number one. SpaceX and the phone companies.

Late Thursday, Bloomberg News reported that SpaceX is in talks to get access to at least eighty thousand cell sites across the United States. Crown Castle, one of the biggest owners of cell towers in the country, was named as one of the companies SpaceX has been talking to. The point of all those sites is simple. SpaceX wants to build a fourth nationwide wireless carrier, to compete head-on with A-T-and-T, Verizon, and T-Mobile.

Here's why that matters. Today, SpaceX's Starlink service mostly sells internet from satellites, and a lot of that business is in rural and hard-to-reach places. Satellites are great for coverage, but they're not enough to carry the kind of phone traffic you get in a big city. To really compete for your phone plan, you need towers on the ground. And this report says SpaceX is going after a lot of them.

This also isn't the first move. A few weeks ago, SpaceX bought low-band wireless spectrum, the airwaves that carry phone signals over long distances and into buildings. That news sent A-T-and-T and Verizon to their worst single-day drops in more than twenty years. So investors have seen this movie before, and today they reacted fast.

A-T-and-T fell almost eight percent and closed at its lowest level in more than three months. T-Mobile also fell almost eight percent. And T-Mobile's majority owner, Germany's Deutsche Telekom, fell about four percent in U.S. trading. Verizon was the interesting one. It was down about four percent in early trading, but it fought back and finished down only about one percent.

Now flip it around. If SpaceX needs tens of thousands of towers, somebody has to rent them out. That's the business Crown Castle and American Tower are in. Crown Castle jumped about nine percent. American Tower rose about four percent, and S-B-A Communications, another tower owner, rose about three and a half percent. SpaceX itself rose almost two percent.

SpaceX also had help from Wall Street today. PhillipCapital, which had a sell rating on the stock, flipped all the way to a buy and more than tripled its price target, to two hundred fifty dollars from seventy-five dollars. The analyst pointed to stronger-than-expected growth in the company's A-I business, which SpaceX reported earlier this week. SpaceX closed near one hundred forty-seven dollars, so that target is a long way above where the stock trades. And remember, SpaceX fell about nine percent on Thursday, so today's gain only got back a small part of that.

So how worried should the phone companies be? Here's the honest answer. Building a nationwide wireless network from scratch takes years. You need the spectrum, the towers, the equipment, the customer service, and a lot of money. Analysts at Bernstein made exactly that point today. They wrote that the competitive impact may still be years away, but that anticipation alone, reinforced by every new spectrum and tower move, is likely to stay an overhang on the whole group. In plain English, the stocks can stay under pressure long before SpaceX signs up a single big-city customer.

There's another wrinkle. One option the carriers have is to rent SpaceX space on their own networks, the way smaller brands do today. Bernstein said that kind of deal may not appeal to the carriers, but they've also found that standing together against SpaceX hasn't done much to help their stocks. So they're stuck weighing their options while the market prices in a new rival.

Why does this hit A-T-and-T and T-Mobile so hard? Because these stocks are owned for steady, predictable cash. Phone plans are a mature business. Three big players, prices that don't swing much, and dividends investors count on. A well-funded fourth player run by Elon Musk threatens that calm, even if it takes years to arrive. Investors don't need SpaceX to win. They just need to believe prices could get more competitive, and that's enough to knock the value of those steady cash flows down.

So here's what to watch. First, whether SpaceX or Crown Castle confirms any deal, and how big it is. Second, what the carriers say on their next earnings calls about competition and pricing. And third, whether the tower stocks can keep these gains. For years, the worry for tower owners was that the big carriers were spending less. A brand-new, deep-pocketed customer changes that picture.

Deep dive number two. Oil and the energy stocks.

Oil had a big Friday. Brent crude, the global benchmark, rose about three percent to settle at one hundred sixteen dollars and seventy-two cents a barrel. That's its highest close since April twenty-ninth. U.S. crude rose almost four percent, to one hundred three dollars and twenty-seven cents. For the week, Brent climbed about six percent. U.S. crude rose about two percent.

What's driving it? The Middle East is getting more dangerous for oil supply, not less. Iran-backed Houthi rebels in Yemen have carried out a series of attacks across Saudi Arabia, including on energy infrastructure. Saudi Arabia is the world's largest crude exporter. Saudi Aramco, the state oil giant, told staff to leave its headquarters in Dhahran and work remotely after the attacks. On top of that, authorities in the United Arab Emirates reported an oil spill from a tanker off their coast, and they haven't said what caused it.

And then there's Iran itself. Reports this week said the U.S. and Israel have plans ready for new strikes on Iran after the U.S. midterm elections, and traders are increasingly betting those strikes could come in the next few weeks. President Trump said on Friday the U.S. could end the war with Iran quickly, but that maybe it should let the conflict wind down gradually. That kind of uncertainty keeps a risk premium baked into the price of every barrel.

There's also less of a cushion than there used to be. The U.S. Strategic Petroleum Reserve, the emergency stockpile, is already at its lowest level since nineteen eighty-two after being tapped during the war. So the U.S. has fewer barrels to throw at a sudden supply shock.

Now, who wins when oil goes up? The companies that pull it out of the ground. The energy sector rose about two and a half percent today and hit a record high. Exxon Mobil rose almost three percent. Chevron rose almost three percent as well. ConocoPhillips gained about three and a half percent.

But the standout was S-L-B, the company most people still know as Schlumberger. It's the world's biggest oilfield services company. If an oil producer wants to drill a well, map a reservoir, or squeeze more out of an old field, S-L-B is often the one doing the work. Its stock jumped about seven percent after earnings. Rival Halliburton rose about five percent along with it.

Here's what S-L-B reported. Third-quarter profit, adjusting for one-time items, came in at sixty-four cents a share. Analysts were looking for about sixty-two cents. Revenue came in at about nine-point-four-five billion dollars, ahead of the roughly nine-point-two-eight billion that was expected. The big driver was North America, where revenue jumped about twenty-four percent to two-point-four billion dollars as drilling picked up.

The more interesting part was the outlook. S-L-B expects fourth-quarter revenue of about ten billion dollars, up five to seven percent from the third quarter. And it signaled a stronger twenty twenty-seven. The Middle East is S-L-B's biggest market. It was hit by the conflict, but activity has been coming back in countries like Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates. The company's Middle East and Asia revenue rose about nine percent from the prior quarter, though it's still down from a year ago. The C-E-O also said revenue in Venezuela is on track to more than double this year, and could grow several times over in twenty twenty-seven as international oil companies ramp up there.

There's a small irony here. S-L-B is betting on the Middle East settling down. Its fourth-quarter forecast assumes no further escalation in the conflict. But the oil price is rising precisely because investors think things could get worse. So S-L-B got a boost today from higher oil, while its own outlook depends on calmer conditions. Both things can be true for a little while. If oil stays high, producers have more money to spend on drilling. And if the region calms down, S-L-B gets its biggest market back.

Now, the other side of high oil. It's a tax on almost everyone else. Airlines, delivery companies, retailers, and anyone who drives to work feel it. That's a big reason consumer stocks and staples were down today, and why nearly three out of every four stocks in the S-and-P five hundred fell. Higher energy prices also feed into inflation, and that brings us right back to the Fed. The Fed raised rates in September for the first time since twenty twenty-three. Markets don't expect another move at next week's meeting, but futures are leaning toward another hike in December. Every jump in oil makes that December hike look a little more likely.

Here's what to watch. First, any new attacks on Saudi energy sites or tankers in the Gulf. Second, whether Brent can hold above one hundred fifteen dollars. And third, Exxon and Chevron's own earnings, which come out next Friday, October thirtieth. With oil this high, investors will want to know how much of that windfall shows up in their profits, and how much they plan to hand back to shareholders.

Deep dive number three. American Express.

On paper, this was a good quarter. American Express reported record third-quarter revenue of about twenty-point-one billion dollars, up nine percent from a year ago. Profit, adjusted for one-time items, came in at four dollars and sixty-eight cents a share. Analysts were expecting about four dollars and forty-eight cents, so that's a solid beat. On an unadjusted basis, earnings were five dollars and forty-two cents a share, boosted by a gain from selling its stake in a corporate travel business.

Amex also raised its outlook for the year. It now expects full-year earnings, adjusted, of seventeen dollars and sixty cents to seventeen dollars and ninety cents a share, and the middle of that range is above what Wall Street was expecting. It also said it's still on track for about ten percent revenue growth this year. And credit looks healthy. The company set aside about one billion dollars for possible loan losses in the quarter, down from about one-point-three billion a year ago, because it was able to release some reserves.

So why did the stock fall almost four percent? A few reasons.

First, revenue came in just a hair below forecasts. Analysts were looking for about twenty-point-one-two billion dollars, and Amex came in at about twenty-point-oh-six. That's a tiny miss, but for a company that's built its story on steady spending growth, investors noticed. Executives said part of the drag came from ending some small business card partnerships.

Second, the job cuts. American Express said it's eliminating about five percent of its global workforce, about thirty-five hundred jobs, and taking a restructuring charge of about three hundred thirty-six million dollars. C-E-O Stephen Squeri told analysts the company has good momentum, but needs to become a more agile and efficient organization to keep winning. The finance chief told C-N-B-C the goal is to make Amex leaner, more agile, and to prepare for A-I. The idea is to cut layers of management first, so the company can then automate more of its work with A-I over the next few years.

Amex isn't alone. On Thursday, Barclays confirmed plans to cut about five thousand jobs, also roughly five percent of its staff, in another technology-driven cost push. And that's the bigger theme here. Big financial companies are making good money right now, and they're still cutting jobs, because they think A-I can do more of the routine work. For investors, that can mean better profit margins down the road. But in the short run, it also means restructuring costs, and it raises a question about whether the growth story is slowing.

Third, expenses. Investors have been watching Amex's spending closely after it ramped up marketing and refreshed its cards with new perks. Total expenses rose about nine percent in the quarter, to about fourteen-and-a-half billion dollars, right in line with revenue growth. That doesn't leave much room for margins to widen without the cost cuts.

And there's context for the reaction. Before today, the stock was already down about twelve percent this year and had lagged the S-and-P five hundred. So a quarter that's good but not great doesn't get much credit.

One more thing from the call was interesting. Squeri spent a good chunk of his remarks on A-I, and specifically on A-I shopping agents, the software assistants that could someday book trips or buy things for you. He said Amex wants to meet customers where they are, but it's not going to let those assistants run rogue through its systems. Only approved agents, connecting through official channels, will get access. That's a window into how card companies are thinking about the next big shift in how people pay.

Because American Express is one of the higher-priced stocks in the Dow, a move of almost four percent carries a lot of weight in that index. It was one of the main reasons the Dow did worse than the S-and-P and the Nasdaq today, along with drops in names like Caterpillar, Home Depot, and Procter and Gamble, each down about two to two and a half percent.

Here's what to watch for Amex. First, whether spending by its wealthy card members keeps holding up as oil and prices squeeze the rest of the economy. Second, whether the job cuts show up as lower costs in the next few quarters. And third, how the market treats other financial companies cutting jobs in the name of A-I. So far, it's not being treated as an automatic win.

Deep dive number four. Palo Alto Networks, CrowdStrike, and the cybersecurity stocks.

This story starts with a scare. On Wednesday, the developers of P-H-P, one of the programming languages that much of the internet runs on, released fixes for critical security flaws that had been hiding in the software for years. Those flaws were found with the help of A-I. And the details got out before many companies could patch their systems.

What happened next was dramatic. Governments and companies from Tokyo to Helsinki took banking, airline, rail, tax, and government websites offline as a precaution while they patched. In Japan, big names including Nomura, Mitsubishi U-F-J, A-N-A, and East Japan Railway temporarily suspended some online services. Finland's government I-T provider shut down public web services for a day. Cloudflare said hacking attempts jumped from thousands before the announcement to millions afterward, and Amazon also reported widespread attempts to exploit the flaws. Microsoft C-E-O Satya Nadella said he hadn't seen anything like it in a long, long time.

Now picture you're the head of security at a big company this week. Your boss just watched governments pull websites offline. That's the kind of moment when security budgets get approved.

And that's where the second piece came in on Friday. Evercore I-S-I put out its quarterly survey of cybersecurity resellers, the partners who sell and install these products for businesses. Because they're closest to the purchases, they tend to see changes in demand first. According to reports on the survey, partners said security budgets are getting stronger heading into year-end, sales pipelines look healthy, and there's no sign of demand dropping off. The hottest areas were protecting identities, securing A-I and data, and securing cloud systems. And the survey named CrowdStrike and Palo Alto Networks as the leading winners from companies spending on A-I security.

Put those two together, a live global security scare plus a survey saying the money is flowing, and the stocks took off. CrowdStrike jumped about eight percent. Palo Alto Networks rose about seven percent. Zscaler and Cloudflare each rose about seven percent too, and Okta gained almost six.

There's a nice contrast with Thursday here. Thursday, investors punished the companies spending huge sums to build A-I. Friday, they rewarded the companies that get paid to protect against what A-I can do. That's the market getting pickier about A-I. It's no longer one big trade where everything rises together. The question investors keep asking is: who's spending the money, and who's collecting it?

But a caution here. A survey and a scare are not the same as revenue. These stocks already trade at high prices compared with their profits, so expectations are high. Palo Alto's next earnings report is expected next month, and that's when investors will find out whether these year-end budgets actually turned into bigger deals. A security panic can lift budgets for a quarter, but the stocks need it to last.

Here's what to watch. First, whether the P-H-P problem keeps spreading, or whether patches get it under control. Second, any comments on security demand from Microsoft, Alphabet, and Amazon next week, since all three sell security tools through their cloud businesses. And third, whether the cybersecurity group can hold these gains on Monday, or whether this was a one-day pop.

Before we wrap, a few quick notes. Bloom Energy fell about eleven percent, even after raising its forecast for the year. Deckers, the company behind Hoka and Ugg, fell about five percent after its sales came in below forecasts.

So here's the picture after the close. The Dow had a rough Friday, down about one and a quarter percent, while the Nasdaq held up much better. Oil was the big pressure point, with Brent at its highest close since April and the energy sector at a record. SpaceX's wireless ambitions knocked the phone stocks and lifted the tower owners. American Express showed that beating on profit isn't enough when growth looks a little tired. And the cybersecurity stocks showed that some corners of the A-I trade are still getting rewarded.

Here's what to watch next week, and it's a big one. About a third of the companies in the S-and-P five hundred report results. First, Microsoft and Alphabet report on Wednesday, and Amazon reports on Thursday. After Meta's report this week, investors will zero in on how much they plan to spend on A-I, and whether that spending is paying off. Second, the Federal Reserve announces its decision on Wednesday afternoon. Markets expect no change, so the focus will be on whether Fed Chair Kevin Warsh hints at a December hike. Later in the week, we also get a first look at third-quarter economic growth. And third, oil and the Middle East, along with earnings from Exxon and Chevron next Friday. Intel, Sandisk, Eli Lilly, and Caterpillar also report during the week.

We'll be back Monday morning with futures and the day's catalysts before the opening bell. Enjoy the weekend. Thanks for listening. I'm Trade and Ticker.